Hill sheep farmers were significant beneficiaries from the upturn in the trade in 2020. By the time producers were trading their main run of lambs, both the deadweight and liveweightmarket had improved significantly.
The hill sheep participants in the programme also recorded a marked improvement in the number of lambs weaned and available for sale.
These two factors combined provided a strong platform for an improvement in financial performance. The average gross margin increased by £26/ewe to reach £57/ewe (€66).
The 2020 increase has closed the gap in gross margin to lowland ewes which was recorded at £87/ewe (€101) in 2020. The main driver differentiating the gross margin between lowland and hill systems is the number of lambs produced per ewe joined. As detailed in last week’s feature, the gross margin per ewe also increased across the five lowland farms but not to the same extent as on hill farms, which will be discussed in more detail later in the article.
The average farm size across the five lowland producers is 88ha. Three of the producers are farming 33ha, 47ha and 56ha, with the high average figure underpinned by Kate Kingan and Peter Mant farming 222ha.
There is a similar situation among the hill sheep participants, with a wide range in area farmed and land areas of 130ha, 215ha, 280ha, 386ha and 840ha.
The average number of breeding ewes on hill sheep enterprises, at 496 ewes, is almost twice the level of 263 lowland ewes.
A number of farmers in the programme are planning to increase ewe numbers over the course of the programme.
This will be carried out in line with an increase in grassland productivity with a key aim to increase stock numbers in a sustainable manner.
Feed costs and in particular expenditure on concentrates is one of the greatest outlays contributing to variable costs on sheep farms.
The volume of concentrates fed to lambs in 2020 reduced considerably, with this influenced by a combination of improved grassland management reducing the volume of concentrates required to finish lambs while a vibrant store lamb trade also encouraged some participants to sell lambs that would otherwise be sold fat late in the year.
The wide differential in the average cost of concentrates is partly due to low overall volumes while there are also a few other factors at play. Lowland farmers finishing lambs early in the season or feeding artificially reared lambs were typically purchasing a higher-spec feed and purchasing in pelleted form, to aid feeding in creep feeders, which added another £10 to the cost.
Some of the hill producers were buying at a time of year when concentrate costs were at their lowest and were also purchasing through producer groups, which also reduced price.
As expected, there is no significant difference in the cost of ewe concentrates.
As mentioned previously, there was a higher percentage of lambs sold on lowland farms as stores in 2020, with farmers opting to take advantage of the higher prices.
This resulted in 53% of lambs produced on lowland farms sold as slaughter-fit, with 35% sold as stores. The balance of 12% of lambs produced retained as replacements is 3% to 4% lower than in 2019. This reduction stemmed from one producer opting to change his system temporarily and not retain any homebred replacements for one year. The replacement rate across the lowland farms is typically 18% to 20%, with some producers purchasing ewe lambs or ewe hoggets to introduce maternal genetics to their flocks before opting in general to move to a closed flock system.
The replacement rate among hill sheep producers was recorded at 26% in 2020. The target for producers is to reduce this closer to the 20% mark. The main challenge in achieving this is reducing the barren rate through a programme of optimum nutrition before, during and after breeding, minimising the risk of ram fertility issues and addressing underlying health issues such as OPA.
The average breeding replacement cost of £82 (€95) was the same across the lowland and hill sheep systems in 2020. The average replacement cost on the lowland side was lower by merit of the lower replacement rate and a higher cull ewe value which averaged £83/ewe (€93) sold in 2020.
The average cull ewe value on hill sheep systems also recorded a similar improvement in 2020 and was recorded at £59 (€68). The replacement rate being equal to lowland enterprises is being underpinned by a significantly higher replacement rate in 2020 as already discussed.
It is highly unusual for prices of lambs produced on hill sheep farms to exceed the average price realised on lowland farms, but this rare situation occurred in 2020.
The average fat lamb price for hill sheep systems of £94 per head (€109) was £2 per head higher than for lowland lambs while the average price for hill store lambs of £79 per head (€91) was £1/head higher.
This reflects the upward trend in farmgate prices, with store lambs a big beneficiary in the final months of 2020.
A defined breeding programme is also paying dividends on hill farms, with producers operating a combination of pure breeding to generate sufficient replacements and optimising crossbreeding to increase the value of as high a percentage as possible of store lambs.
It is typical for the average vet cost per ewe to be significantly higher in lowland systems versus hill sheep systems.
The more intensive nature of the system raises higher costs but this is typically diluted somewhat as it is borne across a higher number of lambs. Significant costs borne by farmers in 2020 include a move on many farms to implement a more robust health programme with a particular emphasis placed on vaccination for abortion-causing agents and lameness control.
Invaluable data of little use if not acted upon
Programme adviser Senan White highlights that benchmarking is an important task to ascertain how the farm is performing on a physical and financial basis. Farms in the programme are operating to a three- or five-year farm plan and Senan says completing this task early in the year provides the best opportunity to tweak farming blueprints where required.
He highlights that benchmarking can provide invaluable information but is only as good as the information that it is based upon and farmers assessing their performance clinically. “The findings can sometimes make hard reading but there is little point in going to the trouble of completing the exercise if you have not provided all the relevant information or carry out the process and fail to make any necessary changes.”
Senan says that all the farmers have now reviewed their own performance and a task that will be completed in the coming weeks is farmers discussing their results in a group setting. “The farmers must be commended for sharing their performance. It is not an easy thing to do but a major outcome of the programme is for other farmers operating similar systems to be able to compare their performance. We will be delving deeper in 2021 into many aspects of physical and financial performance and hopefully farmgate prices remain in a strong position to reward technical improvements achieved.”